Rippling CFO Adam Swiecicki discusses leadership and sustaining growth on the Run the Numbers podcast
In early March, Rippling’s CFO Adam Swiecicki spoke with CJ Gustafson on the Run the Numbers podcast. In a wide-ranging conversation, they talk about effective capital allocation, how to become a more impactful strategic business partner, the upshot of Rippling’s unique compound startup model, and so much more.
Read on to get a peek behind the curtain of how the CFO of a late-stage, high-growth startup thinks about work, runs a team, and plans for the future.
This conversation has been edited for length and clarity.
Frameworks and habits
What qualities do you think separate good CFOs from great ones?
The essential quality for a CFO is effective capital allocation, which is paramount for guiding company growth and strategic investment. This involves a deep understanding of business operations and the strategic foresight to allocate resources wisely. Standout finance leaders also challenge the status quo and provide independent, strategic insights.
The level one version of a CFO is the accounting side of things—i.e., are your numbers correct and accurate? Then there's the level two CFO, who can forecast accurately both on the top and bottom lines. Level three is rare: someone who can take a forecast and, based on what he or she is seeing in the business, use it as a tool to better inform proactive changes in capital allocation. These CFOs understand business drivers, can make impactful decisions, identify opportunities for growth, and invest behind that.
How does a CFO allocate R&D resources when building an entire platform, not just a single layer in a tech stack?
At Rippling, we spend significantly on R&D, comparable to or exceeding peers, and focus on our software suite and the integration of products across HR, IT, and finance.
We assess R&D investments using financial metrics, like the Rule of 40 and R&D paybacks, and consider revenue delivery against targets. We also look long-term and assess the potential revenue required to support these investments over a five-year period to sanity check the size of our investment relative to the growth opportunity. This helps us avoid overinvestment.
Additionally, we look at products across a few categories—mature, nascent, and not yet launched—and balance investments appropriately. We want to drive scale in our existing business units while reinvesting some of those profits in our newer products that will continue to drive our growth in the future.
How do you balance strategy and execution in your role?
In the startup environment, success is 99% execution and 1% strategy. This focus drives my daily operations. My approach includes fostering a culture of urgency, focusing on impactful projects, and ensuring that there is single-threaded ownership within the team end-to-end so we have a culture of accountability. This balance allows us to maintain agility and responsiveness in a competitive, evolving market.
When I think about my typical day, I try to save some time for high-level thinking and observing the machine of the company to identify ways to make it run better. But then separately, I get involved in the areas where I can give the most leverage to the business, whether that's within the finance team or outside of it, both as a team leader and as an IC.
The compound startup
Can you elaborate on Rippling’s startup structure?
Rippling operates as a compound startup, not just focusing on one sector but launching multiple SaaS business lines across HR, IT, and finance from a single, interoperable platform. This approach allows us to build products on top of our platform with very small R&D teams and scale them quickly due to synergies with existing products and a large existing customer base we can sell to. Leveraging our knowledge of our customers, Rippling targets products to the right customers at the right time, such as selling our IT products when the first IT hire is made within the HRIS. This has allowed Rippling to scale its new product launches to meaningfully contribute to revenue very quickly and for the company overall to grow faster and for a longer period of time than a typical SaaS business.
How does Rippling monetize its business model?
Just like Rippling is a compound startup with multiple business lines, we also monetize our product offerings in a number of different ways, providing us with a diverse set of high-quality revenue streams.
We rely chiefly on SaaS subscription fees but also have other meaningful revenue streams. These include earnings from foreign exchange services during payroll or bill payments, float income from moving money while it is in transit, and interchange fees from corporate card swipes. Additionally, Rippling receives revenue share for its role as a strong distribution channel for third parties like Google Workspace or 401(k) partners.
What are the competitive moats in your industry?
Rippling stands out by offering a unified platform across HR, IT, and finance on a global scale, leveraging employee data to simplify operations and integrate services. Our entire product suite leverages an employee-centric database called the “employee graph” to enable cross-functional product intelligence and interoperability, which would otherwise be impossible.
Here are a few specific examples of how the employee graph unlocks superpowers in the Rippling product suite beyond the obvious use cases in HR and payroll. In IT, you can issue a new device to an employee with all of their applications (Tableau, Salesforce, etc.) pre-loaded and with proper permissions tailored to that employee’s department and level. In finance, Rippling’s system can easily identify anomalous spend and ensure compliance with policies. An expensive dinner event may be appropriate for a sales rep but not for an employee in customer support.
Furthermore, all of the precise policies, permissions, and role-based controls update in real time as employees change departments and levels. There are hundreds of these changes each month at many companies, and no other system is built like Rippling to ensure that they are propagated correctly and automatically across all impacted systems.
Staying ahead of the curve
What is Rippling's North Star metric for optimizing company performance?
Our top priority is ARR growth, underpinned by our investors’ analysis, which highlights the importance of sustaining high growth and minimizing its decay as the factor most correlated to long-term company value. This growth strategy, coupled with our high gross margins, efficient customer acquisition costs (CAC paybacks), and a vigilant eye on our R&D investment, guides our operational focus.
Reflecting on the significance of revenue growth endurance, how does Rippling aim to maintain its growth trajectory compared to its competitors?
Our ambition is to significantly exceed the conventional growth rates seen in our sector at scale. We will accomplish this by expanding in multiple ways: serving more and larger customers, investing in depth and breadth across our existing product lines, evaluating new product lines that will pay off over a longer time horizon, and expanding globally. This combination of growth across multiple vectors—company size, products, and geographies—requires strong execution, but if done properly, it will help us build a generation-defining company.
With the launch of Bill Pay and its integration with your platform, how does this differentiate from other offerings in the market?
Rippling Finance Cloud uniquely consolidates all company spend, including payroll, corporate cards, expense management, and bill pay, into a single view encompassing both operating and people expenses. Most finance “all-in-one” competitors do not track and plan people expenses at all, even though that is a company’s biggest and most important investment!
Additionally, because Bill Pay is seamlessly integrated with our employee graph, it enables precise spend control by department and ensures that bills are always routed to the right set of approvers, whether it be managers, finance business partners, or procurement, because Rippling natively understands all of these relationships.
Finally, Bill Pay, when combined with the rest of the Rippling platform, enables precise insights and budget optimization. For example, with our IT suite, you can easily analyze the usage of all major software vendors being paid through Bill Pay, identify inactive or only lightly used software seats, and cut back low ROI spend with those vendors. This type of analysis and budget optimization is only possible using an integrated platform like Rippling.
Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.
